Facebook blunder still a triumph

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Jim Calhoun
Jim Calhoun

Like most people, you probably get ad­vice from friends before a big purchase – perhaps you even consult friends on little purchases. You've probably noticed that getting insights from your trusted connec­tions is easier than ever, thanks to e-mail, instant messaging, mobile phones, and so­cial networking sites.

Even if you lack an expert in your im­mediate social network, a quick online search can help you find consumer reviews and blog posts, all posted by people you're more likely to trust than an ad. Word of mouth is now digital, scalable — and ripe for marketing innovation.

This little shift in your behavior — favor­ing your network over a publisher-owned network — is changing the world of market­ing in significant ways. The word-of-mouth marketing industry grew to over $1 billion in 2007, according to PQ Media.

Nothing sheds light on the future of on­line word of mouth quite like Facebook's recent Social Ads initiative. Yes, it botched the whole thing. People revolted; Facebook retreated. Yet the truly powerful idea here is that Facebook inserted commercial content into Web pages based on social connectivity, weaving brands into online conversations.

For those who understand the predictive power of social connectivity as it relates to marketing, Facebook's initiative was a wa­tershed event. How else might your circle of friends be used to personalize your Web experience? The possibilities are mind-blowing, assuming the privacy issues can be managed.

While the ultimate Facebook execution will no doubt evolve, I would argue that the general direction is good for consum­ers, advertisers and publishers. Consumers benefit from custom-tailored information, advertisers benefit from highly targeted in­ventory, and publishers benefit because it allows them to charge premium CPMs and invest in improving the quality of their sites without loading up pages with irrelevant, intrusive ads.

When consumers tap their social network for insights, they are rewarded with a high quality signal-to-noise ratio. Contrast this with the media experience delivered by leading online publishers, who have pages littered with online detritus screaming for your attention — all noise, very little signal.

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